Maersk Fails to Sink Overtime Liability

MANHATTAN (CN) – Maersk, the shipping company plagued by piracy in recent years, must provide overtime pay to a class of sickly seafarers it discharged early, the 2nd Circuit ruled. John Padilla led a class action against Maersk Line Ltd. on behalf of seafarers who were discharged because of injury or illness. His contract as chief cook on board the Maersk Arkansas started on Oct. 30, 2006, and was to end on Feb. 26, 2007. Maersk discharged Padilla as unfit for duty on Nov. 6, 2006, however after he sustained an abdominal injury. Though Maersk covered the base pay through the contract of workers it discharged for injury or illness, it did not pay overtime as part of the unearned wages. The base pay included a maintenance payment for food and lodging expenses, as well as a cure payment covering medical treatment. The seafarers normally receive significant overtime pay, however. By Maersk’s own calculations, seafarers routinely received overtime pay in excess of the entire amount of their base pay. At the time of his discharge Padilla was entitled to his balance of earned wages, which included 34 hours of overtime in addition to his six days of regular pay. Maersk voluntarily paid Padilla for unearned wages and maintenance and cure, but the company refused to pay him for the overtime wages that he would have earned. It argued that seafarers are not entitled to overtime because it is not included under general maritime law’s definition of “unearned wages.” Before considering class certification of Padilla’s 2007 lawsuit, a federal judge addressed the merits of his individual claim. Maersk claimed that its collective bargaining agreement with the Seafarers International Union excluded overtime from his recovery of unearned wages, but the court found that the union contract did not address overtime inclusion in the calculation of unearned wages. As such unearned wages included overtime pay if the seafarer reasonably expected to earn overtime during service for a sum that was not speculative and would have earned it “but for” an illness or injury, the court said. Finding that Padilla satisfied this test, the court awarded him $13,478.49. U.S. Distric tJudge Richard Berman took over the case in 2010, certified a class and ultimately awarded them of $836,819.40 in January 2012. As Maersk appealed, the lower court agreed to remove two seamen from the class who filed their own separate lawsuits. It rejected Maersk’s second motion to remove 15 officers from the class, however, as filed after the allowed deadline. In that motion, Maersk argued that the officers were governed by a different collective bargaining agreement with the American Maritime Officers Union, which specifically limited unearned wages to “benefits/wages only” and not overtime. Last week, a three-judge panel of the 2nd Circuit affirmed the overtime award and the refusal to amend the judgment. “Under general maritime law, seamen who have become ill or injured while in a ship’s service have the right to receive maintenance and cure from the owner of the vessel. In addition, a seaman is entitled to recover unearned wages, the wages he would have earned if not for the injury or illness,” Judge Barrington Parker wrote for the court. “Because much of Padilla’s income was derived from overtime compensation, the District Court awarded him overtime pay as part of his unearned wages, reasoning that Padilla was entitled to recover in full the compensation that he would have earned ‘but for’ his injury,” he added. “We agree with this approach. “Significantly, the district court concluded that the calculation of the overtime Padilla would have worked was not speculative. … In fact, the calculations of the overtime pay due to the class were essentially undisputed: a Maersk manager easily calculated each seaman’s expectation of his overtime from records of past work for Maersk. Thus we agree that the district court correctly applied the ‘but for’ test.”